Fate Therapeutics, after months of hunting, has found a deep-pocketed partner to take its stem cell technology mainstream, at least for academic and pharmaceutical industry labs.

The San Diego-based startup—founded by scientific big shots at Harvard University, Stanford University, The Scripps Research Institute, and the University of Washington—is announcing later today that it has struck a partnership with medical technology giant Becton Dickinson (NYSE: BDX). Terms of the deal aren’t being disclosed, but Fate will get an upfront cash payment, research funding, milestone payments based on commercial success, and a percentage royalty on product sales. In return, Franklin Lakes, NJ-based Becton gets the right to co-develop and commercialize lines of induced pluripotent stem cell (IPS) tools and technologies for drug discovery and development.

Fate has been seeking to carve out a position as one of the early leaders in commercial application of stem cell technology for the pharmaceutical business. The company generated its fair share of buzz a year ago when one of its co-founders, Sheng Ding of Scripps, found a way to use three conventional small-molecule compounds to coax adult human cells into an embryonic-like state that gave them the potential to become almost any other cell in the body. That’s important not only because it sidesteps the ethical controversy around destroying embryos for stem cell research, but it also paves the way for “industrialized” stem cells that can be cheaply and consistently produced for real-world drug development. If an adult skin cell can be coaxed into a pluripotent state, and then differentiated into a functioning human neuron, the thinking is that could be very useful for testing new drugs for Alzheimer’s, Parkinson’s, or other neurological diseases.

Many top academic labs and pharmaceutical companies are seeking to craft their own in-house methods for creating induced pluripotent stem cells in slightly different ways. Having a partner with the global distribution muscle of Becton—with 29,000 employees and a wide range of products that includes everything from cell sorters to chemical reagents to syringes—means that Fate’s technology has a chance to get into the hands of more scientists who are relatively new to the field. It also could help scientists at Big Pharma companies who are trying to develop similar technology in-house, to see how it stacks up with different methods developed by Fate.

“People will be able to get reliable access to state of the art technology. The key here is that it ensures people will have access,” says Fate CEO Paul Grayson.

While this deal is likely going to provide the kind of cash that all biotechs need, it also leaves Fate plenty of room to maneuver as it seeks to become a drug company, not just a technology provider. Fate is still looking for pharmaceutical partners that would … Next Page »